Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

5 year payback period on PPP loans

5 year payback period on PPP loans

How does the new SBA PPP loan modifications affect businesses?

Many business owners were relieved to learn of the PPP loan modification updated on June 5th, 2020.  However, with these new modifications, many folks are a bit confused as to how the payback of the SBA loans will work.  We’ve outlined a few key points to help avoid confusion.  With the first initial PPP loan rules being owed back within 2 years many business owners weren’t feeling much relief.  Beyond the 5 year payback period update to the PPP loan, there are a few more key points to know about the modification and what it can mean for your business.

Key takeaways from the loan modification

First, this new modification only applies to those who received the PPP loan post on June 5th.  For those businesses that were already approved and received their fund prior to the 2 years, the PPP loan payback period is still in effect. Approval is considered to have occurred on the day the SBA assigned a loan number to the borrower. 

Note that no interest has to be paid (at the 1% rate) until that 5 (or 2) year period.

 

Second, the 8 -week covered period is now extended to 24 weeks.  Borrowers who have been concerned with the limited time frame to utilize the loan will now have up to 24 weeks or until December 31, 2020, to use PPP funds granted to them for payroll costs and non-payroll costs eligible for forgiveness. It is important to note that borrowers that already received a PPP loan prior to this update can keep their covered period at 8 weeks if that works for them.

Finally, the threshold has been reduced to 60%.  Previously the SBA requirement was at 75%.  Meaning that 75% of the PPP loan funds had to be spent on payroll costs.  The remaining 25% can be spent on mortgage obligations, rent, utilities, and other operational costs.  With the PPP modification for loan forgiveness at least 60% of the funds must be used for payroll purposes.  The leftover (40%) can be used on non-payroll costs.

To read the in-depth review of all the loan modifications heads over to the treasury website here.

Browse Related Articles

Chat GPT and the Risk Landscape
Cyber Insurance
devAdmin

Chat GPT and the Risk Landscape

Artificial intelligence (AI) chatbot ChatGPT and the risk landscape has recently made waves. Mainly known for producing human-like text and communications from user inputs. Accessible

Read More »